Demerger scheme meetings dispensed where shareholders and creditors of both companies had already given consent.

A petition under Sections 391 to 394 of the Companies Act, 1956 sought sanction of a proposed demerger scheme. On the material before the Punjab and Haryana High Court, the demerged company had only three equity shareholders, with holders of 95.42% consenting to the scheme, and all unsecured creditors and the sole secured creditor had also consented. The resultant company had only two shareholders, both consenting, and no secured or unsecured creditors. In view of these consents and the absence of any practical purpose in holding meetings, the Court dispensed with the meetings of the equity shareholders and creditors of both companies.

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Issues: Whether the convening of meetings of the equity shareholders and creditors of the demerged company and the shareholders and creditors of the resultant company could be dispensed with for consideration of the proposed scheme of demerger.

Analysis: The petition was moved under Sections 391 to 394 of the Companies Act, 1956 for sanctioning a scheme of demerger. The material placed before the Court showed that the demerged company had three equity shareholders, out of whom holders of 95.42% of the shareholding had given consent to the scheme. All unsecured creditors and the only secured creditor of the demerged company had also consented. The resultant company had only two shareholders, both of whom consented to the scheme, and it had no secured or unsecured creditors. In these circumstances, no useful purpose would be served by convening the meetings.

Conclusion: The Court dispensed with the meetings of the equity shareholders and creditors of the demerged company and the shareholders and creditors of the resultant company, and the petition was disposed of accordingly.

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